More than 200,000 savers are planning to cash in their final salary pensions this year — but should you join them?

These old-style company plans pay a set retirement income based on how long you worked and how much you earned, rather than how much you've put away for old age.

They are often described as 'gold-plated' deals because the payouts are generous.

But in a bid to cut costs, many companies are now offering enormous cash sums if you switch to a plan that is linked to the stock market.

'Gold-plated': More than 200,000 savers are planning to cash in their final salary pensions this year

Figures from pensions transfer administrator Xafinity show the amount you could get has soared 14 per cent in a year.

A 64-year-old man with a scheme due to pay out £10,000 a year at age 65 would typically have been offered £206,000 to cash in last year. Today that offer would be nearer £235,000.

These transfer values have risen primarily because of falling interest rates — the Bank of England base rate was cut from 0.5 per cent to 0.25 per cent in August — and lower returns on government bonds, experts say.

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HOW THIS IS MONEY CAN HELP

When rates fall in this way, it becomes more expensive for companies to pay pensioners their incomes. So bosses are keen for workers to cash in — and are offering bigger incentives to get them to bite.

The number of people who have given up their final salary entitlements this year is up 168 per cent on the same period in 2016, according to Xafinity.

Some 215,000 could be on track to cash in over this financial year, up from around 80,000 in the year to the end of March.

The rush has led the Financial Conduct Authority to force financial advisers to improve the way they work out whether the switch is right for savers.

Under FCA rules most people must pay for financial advice before they are allowed to cash in their pots.

Experts say that with talk of an interest rate rise on the horizon, transfer values may have peaked. So now is the time to weigh your options.

Up to 6 million people could be eligible to transfer. But it's a high-risk move. You are giving up a very valuable guaranteed income so you must be absolutely sure you're doing the right thing.

Here, Money Mail guides you through the pros and cons.

REASONS YOU MIGHT CASH IN

Cashing in a final salary scheme means transferring a chunk of money out of your company plan and into a personal pension plan.

Once you've moved your money, you can invest it wherever you like, potentially boosting the value of the pot and therefore the payout you might get in retirement.

Or, if you're over 55, you can simply withdraw some or all of the cash from the new pot and spend it as you please.

Stampede: The number of people who have given up their final salary entitlements this year is up 168 per cent on the same period in 2016

You usually can't transfer out of a final salary pension if you've already started taking an income.

And many public sector schemes, including those for nurses, teachers and civil servants, won't let you move cash out.

Former pensions minister Baroness Ros Altmann, who has cashed in two final salary pensions this year, says it can work if you have several smaller pensions from different jobs.

'A £10-a-week final salary pension could be worth £20,000. Someone with a good base of guaranteed income from other pension pots could cash in without worrying about giving up this income,' she adds.

Some people may find a lump sum more useful than the income. For example, you might want the money to pay debts or care bills, Lady Altmann says.

Danny Cox, an adviser at investment company Hargreaves Lansdown, says cashing in can make sense if you have serious health issues.

'A lifetime income is not as valuable if you're not going to live as long,' he says.

Another reason could be that you want to get your money out in case the scheme collapses. Hundreds of company pension schemes have run into serious trouble, including BHS and Tata Steel over the past 18 months.

This is the amount of money they are short of in order to provide all their members with the pensions they have been promised. There are 4,310 schemes in the red and 1,484 in the black, according to the Pension Protection Fund.

If your old employer does go bust and can't pay your pension, the Pension Protection Fund is in place to compensate.

But your payouts and benefits are likely to amount to less than you would otherwise have received.

Moving your pot into a flexible pension also means that in retirement you can spread out your withdrawals to reduce your tax bills.

Andy James, head of retirement planning at adviser Tilney, points out that if you cash in a final salary deal, your children, or whoever you nominate, will be able to inherit your fund tax-free if you die before 75.

Risk: By moving to a personal pension, the money is at the mercy of the stock market, which means its value could fall as well as rise

A final salary pension will often die with you and your spouse; you may not be able to pass it on to your heirs.

Savers in final salary pensions also have to wait until the scheme's retirement age — typically 65 — to get their incomes, whereas those who've transferred out can get at the cash earlier.

WHEN IT'S BEST TO SAY NO

Cashing in a final salary pension means waving goodbye to a guaranteed income for life. Such pensions also offer some inflation protection, as your payout rises with the cost of living. The calculation for annual increases can vary depending on your scheme.

By moving to a personal pension, the money is at the mercy of the stock market, which means its value could fall as well as rise.

Essentially, you risk having to live on a vastly reduced income or, even worse, running out of money. If that worries you, don't transfer out.

Once a transfer is made there is no turning back. You must be certain you could cope with the consequences.

If your final salary income is in excess of £30,000 you may now be offered more than £1 million to cash it in.

This would push you over the lifetime pension pot limit and you would be hit with 55 per cent tax on anything you received above £1 million.

Tom McPhail, of Hargreaves Lansdown, says: 'It is very easy to be persuaded by the lure of short-term cash, but some may regret their decision later.

'It's crucial that savers consider their capacity and tolerance for loss. Will they need to rely on the money for essential expenditure in retirement? If the answer is yes, the transfer shouldn't go ahead.'

The key point to take away is that when you transfer your pension you take on all the risk of the stock market crashing instead of the company you used to work for. It's a big responsibility and many savers struggle to make the returns they hoped for.

What's more, final salary pensions must, by law, offer benefits to a surviving widow or widower if you die after reaching the scheme's pension age.

Typically, they will get 50 per cent. If you die before the scheme's retirement age, the payout could be closer to 30 per cent. These numbers vary depending on the company you worked for.Many schemes go beyond the minimum and offer payouts to dependant children, too.

'This is a valuable benefit and should not be disregarded lightly,' says Sir Steve Webb, a former pensions minister, now director of policy at pension provider Royal London.

Lady Altmann says: 'Many people will still be best advised to stay with their employer's guaranteed pension, especially if they have no other pension.'

Transfer decision: A specialist financial adviser will work out whether you're likely to qualify for a higher annual income in retirement

WHY YOU MUST GET ADVICE

If you're tempted to cash in, the starting point is to get a transfer value quote from your scheme.

The average payout is £241,000 for an income worth £10,000 at age 65 but you could get much more.

Research by Royal London found that the typical cash sum offered is between 25 and 30 times the value of the annual pension.

It found that people who cashed in most commonly received between £250,000 and £500,000 — which is more than the average UK house price of £216,000.

In a survey of 800 financial advisers, Royal London also found that one in four had dealt with transfers worth 30 to 40 times the annual income. That would mean a lump sum worth as much as £400,000 in exchange for giving up a £10,000 income.

Sir Steve Webb, of Royal London, has a smart way of assessing the value of a deal.

'Suppose you expect to be retired for 20 years and are giving up a pension of £10,000 a year,' he explains. 'Over the next 20 years you would receive £200,000 plus inflation. So the scheme would need to offer you a lump sum of £200,000 or more.'

Whatever your plans for the money, you'll have to transfer it to another pension first and you will need to pick where your money is invested. For such a large sum, you may want professional help.

A specialist financial adviser will work out whether you're likely to qualify for a higher annual income in retirement if the funds in the new pension pot generate a good investment return. That should give you a clue as to whether you're making the right decision.

In any event, if your offer is worth more than £30,000 you must talk to an independent financial adviser before you proceed. This is compulsory under rules set by the FCA.

This advice must be provided (or checked) by a qualified pensions transfer specialist. Even for sums below £30,000 it may be worth paying an adviser to crunch the numbers and analyse the benefits you're giving up, because all schemes are different. Your adviser will also look at your wider financial situation.

You'll need to pay a fee for an adviser to make a recommendation. If they recommend that you stay in the scheme but you want to transfer out anyway, many advisers will refuse, forcing you to go elsewhere. Check the adviser's policy on this before you proceed.

OTHER RISKS TO WATCH FOR

The FCA raised concerns at the beginning of the year that unscrupulous firms were targeting savers with final salary pensions and has been watching advisers closely.

Last week it suspended an advice firm called Intelligent Pensions from carrying out transfers. Beware of firms that try to persuade you into moving cash into obscure funds.

Only deal with companies authorised by the FCA. You can check authorised companies by calling 0800 111 6768 or online here.

The FCA has a website to help savers spot scams at scamsmart.fca.org.uk.

And you must be prepared to wait to get your money.

In Royal London's survey of 800 financial advisers, many said they were frustrated with the time it can take to obtain information from schemes in order to provide advice on transfers.

Around 500 of the advisers said they had to wait longer than three months, forcing the saver to get new transfer value quotes, as each calculation for cashing in lasts just three months.